Does subsidized public health insurance for parents improve children's human capital and close achievement gaps?

Abstract

Between 2009 and 2018, many states dramatically changed income eligibility limits for parental Medicaid. We examine whether increasing parental Medicaid eligibility had spillover benefits on children's development. We study the effects of state-level changes in parental income limits for Medicaid on 3rd through 8th grade mathematics and English-language arts (ELA) achievement using county-level administrative test score data. We find that a 50-percentage point increase in parental Medicaid income limits, roughly equal to the average state increase in eligibility over this period, is associated with a 1.5% reduction in the socioeconomic achievement gap for math and a 3% reduction in the white-black math achievement gap. Math test scores improved significantly following parental Medicaid eligibility expansions among black students residing in poorer counties, with little estimated change in test scores for black students in higher income counties. We find no effect in ELA achievement gaps or white-Hispanic test score gaps. Our findings suggest that means-tested policies that improve parental and family wellbeing have important spillover benefits to children's educational achievement and can help reduce inequities in children's human capital development.